It's hardly undocumented... DXTC (masked) alpha test just works that way - pixel is either on or off and the border looks "splinish":
http://www.flipcode.com/cgi-bin/fcarticles.cgi?show=63120
http://en.wikipedia.org/wiki/S3TC
http://www.flipcode.com/cgi-bin/fcarticles.cgi?show=63120
http://en.wikipedia.org/wiki/S3TC